Last night's passage of the greatest expansion of the federal government since the Great Society is a sad day for our country, not only because it may bankrupt our future, but also because we have no recourse to the Constitution. Our Constitution was elegantly designed to protect individuals from too much concentration of power in any one source, but the Supreme Court has evolved into a body that has protected and even facilitated the modern regulatory state at the expense of our founding principles. The optimism of state attorneys general and others who hope to challenge the constitutionality of this legislation is admirable, but such challenges are not likely to be successful.
A challenge to the "individual mandate" is perhaps the best legal option available. The health care bill requires certain individuals to purchase health insurance on a government run exchange, a requirement many legal scholars have argued is an unconstitutional expansion of federal power. It not only imposes a duty on individuals to purchase insurance, but it heavily regulates the available options, requiring individuals to engage in economic activity to subsidize an industry on which Congress has conferred special benefits. Imagine the outrage if, in order to promote general economic stability, individuals were required to buy American cars or purchase stock in one of the government's preferred financial institutions.
Despite this patent overreach by Congress, the Supreme Court's flawed jurisprudence on this issue probably permits it. The government will argue that it has the authority to impose the individual mandate under the Commerce Clause of the Constitution, which permits Congress "to regulate Commerce … among the several States." Supreme Court precedent has interpreted the Commerce Clause to permit Congress to regulate and prohibit all sorts of economic activities that in the aggregate substantially affect interstate commerce.
In the 1942 case Wickard v. Filburn, the Supreme Court authorized the broadest federal power to date, concluding that a farmer growing wheat for his own use was not exempt from federal caps on wheat production that had been established by the government to artificially drive up the price of wheat. The fact that the farmer was growing wheat for his own use meant he would not purchase it on the open market. The Court held that his failure to purchase wheat in the market, taken in the aggregate, would have a substantial effect on interstate commerce. Thus, the Court laid the groundwork for Congress to regulate nearly any activity with a weak connection to economic activity, and for years Congress did not even bother to establish the basis for its Commerce Clause authority.
The Supreme Court had the opportunity to overturn this precedent in Raich v. Gonzales, the 2005 medical marijuana case, but balked. In that case, the Court decided that it was within Congress's Commerce Clause power to prohibit individuals from growing medicinal marijuana for their personal use. In reaching this conclusion, the Court affirmed that activity that does not fall under the Commerce Clause alone can be reached as part of a broader scheme to regulate interstate commerce. This case was blow to those of us who thought the opinions in Lopez and Morrison signaled that the Court was willing to scale federal power back to something closer to the Constitution's original intent.
The individual mandate can be distinguished from these cases, as it compels economic activity where Wickard and Raich did not. But what Raich showed is that the Supreme Court does not have the will to limit federal power when Congress has made the most modest of showings that the activity has economic effects. The individual mandate is likely to be upheld as part of a legislative scheme that regulates economic activity, and the insult to our constitutional government, designed to limit the federal government to enumerated powers, will have received judicial sanction.
Some legal scholars have argued that the Commerce Clause is not even necessary to justify the individual mandate, because Congress has the authority to impose the mandate as a tax under the General Welfare Clause of the Constitution, which permits the government to "lay and collect taxes… [to] provide for the general welfare of the United States." Chapter 48 of the bill refers to the mandate as a "penalty" if "minimum essential coverage" is not maintained for more than a month during the taxable year. This section of the bill amends the Internal Revenue Code, and the provisions are in part administered by the Internal Revenue Service.
Congress has a long history of imposing policy through the Internal Revenue Code -- creating tax credits or penalties where it wishes to create indirect incentives for behavior. The last time a penalty was deemed an unconstituional tax by the Supreme Court was 1922, and since then the Court has permitted taxes on gambling, tobacco, alcohol and a number of other disfavored activities. Should the Commerce Clause prove to be an indefensible basis of authority, the General Welfare Clause would likely be another source of authority. The current Supreme Court, which time and again demonstrates its willingness to uphold the modern regulatory state to legal challenge, is unlikely to delve into a nearly century old line of cases limiting Congress's ability to impose penalties as taxes.
The other arguments that have been considered as legal challenges to the bill are not likely to fare well either. Senator Hatch and several legal scholars have argued that the insurance exchange is a violation of state sovereignty, since it requires states to either establish the exchange as per HHS guidelines, or allow HHS to establish the exchanges within the states. These arguments rely on Printz v. United States, which held that the federal government may not command State officers to administer a federal regulatory program. If the bill forced states to establish the exchange, it likely would amount to a commandeering of state government. But the legislation gives states a choice to allow HHS to establish the exchange. The program usurps state authority to set the parameters for what requirements insurers in-state must meet. But if the regulations do not in fact require state officials to act at the direction of the federal government to address particular problems or administer federal programs, current Supreme Court jurisprudence is unwilling to protect the states' sovereignty.
Likewise, the bill expands Medicaid coverage to include individuals at 133% of the poverty level, nearly 15 million additional people. This is estimated to cost states tens of millions of dollars per year. State governors face imposing 10% or higher tax increases, or risk bankruptcy. Such an unfunded mandate would seem to be a clear violation of state sovereignty principles, but the Supreme Court has held that Congress may attach conditions on the receipt of federal funds. In this case, states receive federal Medicaid funds, and it is within the federal government's power to set conditions, such as who qualifies for Medicaid.
Federalism was meant to structurally secure individual liberty through the diffusion of government power. The reality of our current Supreme Court jurisprudence is that federalism is rarely protected, and only within narrow confines. The only check left on federal power is the government's own sense of self-restraint, meaning elections take on even greater importance.